I3 Energy Share Discussion Threads

[tournesol] 01/2/2022 16:40

I've just re-read the analyst report by Tennison dated 19/10/21 which is on i3E's website.

It's available at


It was written last October when i3E's shares were 12.88p
It valued core NAV at 22.7p

The above was based on the following price deck:-
Brent: US$73.0/bbl 2021, US$76.9/bbl 2022, US$70.9/bbl 2023, US$66.6 2024, US$60/bbl flat thereafter.

NGL price (at local sales point): 35% of Edmonton Light long term.

AECO gas price: US$2.9/mcf 2021, US$3.3/mcf 2022, US$2.7/mcf 2023, US$2.5/mcf flat thereafter.

All of those prices look pretty conservative to me, so in my mind I'm pencilling in the core NAV to be more like 25p

Tennison also assigned an unrisked value to Serenity of 46p/share. They assigned a risk factor/CoS (chance of success) of just 13% so translated the value to an incremental risked NAV of 5.7p (46 x 13%)

I tend to think that applying risk discounts to portfolios of multiple assets makes sense (eg throwing a dice 100 times you can expect 1/6 of the throws to be a six)

But Serenity is a single asset, so there is, to all intents and purposes, only going to be one throw of the dice. It will either be worth 46p or it will be worth nothing. So attributing a value of 5.7p, whilst mathematically satisfying is an outcome that is certain NOT going to happen.

I prefer to think of i3E as a business which is definitely worth, say, 25p (allowing for the price deck above to be adjusted upwards) OR if Serenity comes good, it could be worth 70p

Seems like a good place to be.

My short term target is 20p within 3 months

My medium term target is 30p within 12 months

Longer term, if Serenity gets farmed out we should see progress beyond 30p and if a discovery is drilled which is in line with the pre-drill estimates then we are looking at 50-60p, I'd be surprised if that gets done before year-end - more likely to be well into 2023 or even later.

[goodday1] 01/2/2022 16:18

My 2 trades20,314 & 30,603 Bought.Gl all

[greatfull dead] 01/2/2022 15:59

I do hope we get through 15p today, if not tomorrow.

GLA,
GD

[ianio5691] 01/2/2022 15:47

Chart looks fab....

[markstevenkirby80] 01/2/2022 15:42

28p next rns

[goodday1] 01/2/2022 15:26

It is going to tick up.Is 15 about to go today??Gl all

[goodday1] 01/2/2022 15:12

45K pounds delayed buy just printed.Are they still buying???Gl all

[muddyfox0151] 01/2/2022 14:25

A great value dividend paying company low risk Canadian assets with North Sea thrown in for free and Liberator West could still be the Gem bigger than serenity.....

[greatfull dead] 01/2/2022 11:29

I too feel very positive that Serenity will be drilled this year in a JV with Repsol.

GLA,
GD

[tonynorstrom1] 01/2/2022 11:24

Goodday,

You are right - what I was trying to highlight is the potential revenue from Serenity and compare to the current situation.


What I meant by equivalent oil - is take the current revenue and calculate the barrels of oil required to make that revenue (no gas, no condensate). The answer is approximately 8939 bopd. Compare that to the potential 30,000 boepd from Serenity (nearly all oil) and our current revenue could triple or more depending on how much is farmed out.

ESG concerns seems to have dampened slightly and I sense a recognition that North Sea Oil / Gas has to play a part in the transition. Its encouraging (for shareholders at least) that green peace lost the recent court case on taxes / tax rebates. I'm a little more optimistic about Serenity than I was in the immediate aftermath of Cambo.

[goodday1] 01/2/2022 11:06

HiThe post you are referencing came from LSE & it was by Tony.Thanks to the original poster, perhaps I did not make this very clear, apologies.I think you are reading point 3 alone.Point 3 is an explainer to note 2 regarding FCF & the introduction of Serenity to the mix, that is how I understand it!Is the 13p behind us??Gl all

[tournesol] 01/2/2022 10:50

Morning Goodday1

In your last post but one you said
"...If you convert the 20460 boepd into the equivalent oil - it comes out to 8939 bopd…"

Perhaps I'm having a senior moment here, but I can't figure out what you mean.

Would you mind elaborating please?

Thanks in advance

T

[goodday1] 01/2/2022 10:33

Why PoO will remain high.OPEC struggling to increase the capacity of their production (even the agreed production quota).hTTps://oilprice.com/Latest-Energy-News/World-News/OPEC-Fails-To-Reach-Production-Targets-In-January.htmlOPEC has again failed to meet its own production targets again in January as the group lifted production only 210,000 additional barrels per day for the month.Looking at this through a monthly lens, the group increased production by just 210,000 bpd instead of the 400,000 bpd increased production that the alliance agreed to-creating a January shortfall of 190,000 barrels per day.But the real shortfall is much larger.

[greatfull dead] 01/2/2022 09:41

Ed,

I am in full agreement regards Serenity.

ATB,
GD

[edgein] 01/2/2022 09:23

Goodday,

Good summary. Also worth pointing out that the company's focus in Canada is moving towards oil production at both the Clearwater and Simonette assets. So it will be replacing declining gas production with increasing oil production. We should hopefully get an ops update from the company as we got one Feb last year too. I would expect we'll exit the year on at least 50/50 oil to gas production after they drill those 12+ net wells this year.

I was looking at the information on Liberator West, Minos High and Serenity just yesterday again. Yeah their upside is compelling at $90 Brent. All three of those could have thicker net sands as you move west, Minos high in particular and with the multi Darcy permeability expected flow rates could be spectacular. While the Serenity appraisal looks like the lowest hanging fruit for their assets, Minos high could be a game changer well too.

What a strong position I3E find themselves in, about to go into an intensive drill campaign focused on oil in Canada giving cash flow estimates of $244m for 22/23, with Serenity and Minos high sitting there begging to be drilled at the current oil prices. Exciting times.

Regards,
Ed.

[goodday1] 01/2/2022 08:19

Thanks for this man workings.I calling 15p to be gone by this Friday at the latest.Gl alltonynorstrom1 on LSE & his famous spreadsheet.hTTps://1drv.ms/b/s!AoSqKfvcR4IMgYMR4K-CCauUGys42QJust a couple of notes to go along with the spreadsheet below:1) Production is based on 20460 boepd - this is approximately what i3e are guiding to ye 2022 - I thinks its likely that i3e will top this based on lower than expected declines and better drilling results.2) Dividend based on 25% of FCF and in the range of 1.14p to 1.34p. So a nice jump up but not the double or triple that one person on here mentioned. Again I think it could be higher than this based on higher production volumes and also i3e paying out slightly higher than 25% . The dividend could double if they paid out 40% of FCF which has been mentioned previously in one of their presentation or the readmission document but as I think they want to maintain a progressive dividend - my guess is that they stick at something around 25% and pay any excess FCF in the form of a special dividend or buyback.3) Note also that oil is less than 1/4 of volumes but about half of revenues. Thats why Serenity could be such a monster if it were to come on stream at 30,000 bopd. If you convert the 20460 boepd into the equivalent oil - it comes out to 8939 bopd. If we kept half of serenity at 15,000 bopd for example - that triples current revenues!

[pretax2] 31/1/2022 21:15

So is Canada.

[goodday1] 31/1/2022 16:11

We are on the move.Gl all

[goodday1] 31/1/2022 14:16

We might get it in the next 15 minutes or whenever it is ready.One thing is for sure, it will much much much better than the overpriced one.hTTps://oilprice.com/Energy/Oil-Prices/90-Oil-Is-Only-The-Beginning.htmlThe current move in oil prices is largely attributed to geopolitical risk.The next major move in oil could be triggered if inventories fall to critical levels.Wall Street's consensus seems to be that Brent will reach $100 by the summer.Gl all

[squareloss] 31/1/2022 13:28

Q2 2021 update was 29 July, Q3 was 26 October so I reckon we should see Q4 any time now...

[doughcyclone] 31/1/2022 13:14

When can we expect q4?

[edgein] 31/1/2022 11:15

Pretax,

Yeah even with CAPEX of around $48m, a dividend minimum of £11.6m, they're still estimated to have $75m in cash at the end of the year (at slightly lower average oil and gas prices). To put that into perspective that's more than they paid for Cenovus. So all of their recent acquisitions paying back big time. They're also being very conservative on the modest gearing the company has. No real reason to raise debt when free cash flow is enormous. Then we have the potential to add 10-20k bopd per Serenity well (gross). Could be a very interesting 2022, and its a lot more than Ukraine/Russia driving the current oil and gas prices.

Regards,
Ed.

[pretax2] 31/1/2022 10:53

I3E is just making a ton of money. Forget cash cow, they're a cash Behemoth.
WTI = $87.6 usd/bbl Gas - $4.93 usd/MMBtu
A stable dividend paying company with years of drilling in their portfolio and the chance of huge uplift from the North Sea.

Shareprice has to rise don't it?

[1choip] 31/1/2022 08:34

Operational update is going big

[edgein] 31/1/2022 08:25

Yeah fellas, 30p+ very likely if they don't make any progress towards drilling Serenity. If they complete the farmout of that one then sky's the limit. At 19000boepd and circa 135mmboe there's not much cheaper around AIM O&G than these.

Regards,
Ed.